Markets sputter as recession talk builds

Recession fears have pushed gold, a traditional haven, above $2,000 an ounce and towards a record high. ©AFP

London (AFP) - Global markets wavered on Thursday on the eve of a long Easter holiday and key US jobs data that could provide clues about whether the economy is heading towards recession.

Wall Street opened lower while European markets were higher in afternoon deals and Asian indices diverged.

"Growing recessionary concerns cast a pall over markets," said analyst Richard Hunter at trading firm Interactive investor.

"A number of US releases suggested that the economy is beginning to wilt under the pressure of the Federal Reserve's aggressive (interest rate) hiking policy, with attention now turning to the scale of a recession, rather than whether one will happen."

Focus now turns to the release of key US non-farm payroll figures on Friday, which will provide the latest snapshot of the world's biggest economy.

The data could be crucial to determine the Fed's next interest rate decision.

But all three major European markets and Hong Kong will be shut on Friday and Monday for a four-day Easter holiday weekend.

Wall Street will be closed on Friday but open on Monday, with Tokyo, Shanghai and Shenzhen working on both days.

"The closure...on Friday means that equity traders will be unable to react to the release until next week which, coupled with the long weekend, has seen some traders squaring positions and being unwilling to open new ones given the extended break," Hunter added.

After a few weeks of gains fuelled by hopes the Fed would soon take its foot off the pedal in tightening monetary policy, data this week has fanned talk that its year-long hiking campaign may have gone too far.

"Recent data from the US has raised the likelihood of a recession in the world's largest economy," said Fawad Razaqzada, market analyst at City Index and Forex.com.

On Wednesday, a report from the Institute for Supply Management showed the US services sector grew less than forecast last month, while another pointed to private employers slowing their hiring pace in March.

The readings came a day after news that job openings had fallen to their lowest level since May 2021.

While traders have long hoped for a tightening of the labour market and an economic slowdown that would allow the Fed to stop lifting rates, there is now a rising concern of a deep recession.

Adding to the unease is ongoing uncertainty about the banking sector after last month's turmoil that saw three US regional banks go under and Credit Suisse taken over.

The upheaval was largely blamed on the sharp pace of rate hikes over the past year.